Washing machine tariffs deliver a mixed bag
In January, the Trump administration imposed tariffs on imported washing machines.
Specifically, the administration imposed a 20 percent tariff on the first 1.2 million large residential washers imported in 2018, and a 50 percent tariff on machines above that number. Those figures decrease to 18 percent and 45 percent, respectively, in 2019, and 16 percent and 40 percent, respectively, in 2020. A tariff was also levied on parts for washing machines: 50 percent after the first 50,000 parts imported this year; 45 percent after the first 70,000 parts imported in 2019; and 40 percent after the first 90,000 parts imported in 2020. The tariffs will expire at the end of 2020.
The tariffs stem from complaints filed by Whirlpool Corp. with the Commerce Department contending that Korean manufacturers LG and Samsung have been illegally undercutting prices on washing machines for years.
“This is a victory for American workers and consumers alike,” said Whirlpool CEO Jeff Fettig in a statement. “By enforcing our existing trade laws, President Trump has ensured American workers will compete on a level playing field with their foreign counterparts.”
In the wake of the tariffs, Whirlpool said it would add 200 full-time jobs at its assembly plant in Clyde, OH. Whirlpool also pledged to make broader investments in manufacturing and innovation.
Whether Whirlpool has been genuinely hurt by unfair competition from Samsung and LG is debatable. By some estimates, the company enjoyed 33 to 38 percent of the U.S. market in 2017, while Samsung claimed 17 percent and LG took 13 percent. Whirlpool tallied total sales of more than $21.2 billion last year. That’s a 3 percent increase from 2016, and it’s more than double LG’s appliance sales. Among the world’s appliance manufacturers, only China’s Midea Group reported more gross revenue than Whirlpool.
How much the tariffs will help Whirlpool and hinder competitors remains to be seen. Sensing a change in the wind, savvy foreign appliance manufacturers dramatically increased imports of washers ahead of the tariffs. In November, foreign appliance makers shipped washers to the U.S. at more than double the previous year’s rate, according to data reported by the Wall Street Journal. The extra inventory represents a six months’ supply.
Another factor that may diminish the impact of the tariffs is that both Samsung and LG will soon have a significant manufacturing presence here in the U.S. In January, Samsung opened a new, $380 million washing machine assembly plant in Newberry, SC. The factory already employs 540 people and could host more than 1,000 jobs by 2020. The plant is on track to produce 1 million washing machines this year.
Last August, LG started construction on its first U.S. washing machine assembly plant in Clarksville, TN. The $250 million plant will open in 2019 and create 600 new jobs.
Let’s hope these tariffs don’t derail such investment.